Ok, what I am trying to do here should be pretty simple, but for me it has not been.

I capture footage from my xbox 360 via a Hava (like a slingbox but can record, outputs in mpeg-2 720x480). All I'm looking to be able to do is edit this footage, and then both post it to the web (I'm using vimeo, which is like youtube but with much better codec support) and also allow people to download the source file.

I'm just looking to do this all within some basic, easy to use video editing software. I was originally using Pinnacle Studio 9 which I picked up cheap and it was ok. However, after encoding to mpeg-2 the videos came out interlaced to hell, and the program was buggy, often crashing and dropping out the audio, etc.

So, I download the trial version of PowerDirector6 and like the user interface, but I have run into some problems.

Taking the same 10 minute clip that came out to be 50mb in pinnacle studio 9 and and encoding it via mpeg-2 in PD6 leaves me with a 600mb clip that looks pretty much just as bad as the one from studio 9 did, and is still all interlaced to hell. Plus, it has black bars all around it when I try and fullscreen it and sometimes the black bars will turn purple at interums during the clip.

What gives here? Why do these things come out looking so bad and especially with such bad interlacing? The source is mpeg-2 and the output is mpeg-2. I could output in mpeg-4 and it comes down to 200mb, but it looks just as bad, and just as badly interlaced. The only "deinterlace" option I saw was with regards to mpeg-1 encoding.

Is this kind of software what I should be using here? I thought this would be pretty straightforward, but it hasn't been thusfar.